Hoosier, IMI Consent to $50K Penalty

A problematic time brokerage agreement involving a noncom educational station in Cloverdale, Ind., will cost the companies involved $50,000.

The FCC Media Bureau has adopted a consent decree to resolve issues that came up in the transfer of WSPM(FM) from Hoosier Broadcasting Corp. to Inter Mirifica Inc. The settlement with the companies clears the way for that transfer.

According to the decree, Hoosier violated the rules by accepting certain LMA fees from 2003 through 2014, and both companies erred by submitting certification that their arrangement complied with the rules. Also, Hoosier didn’t retain complete control of operations during the period of the brokerage agreement. But the FCC did not find any intent to deceive.

The terms of the original brokerage deal included monthly payments to Hoosier; reimbursement of Hoosier’s “hard costs”; and an option for IMI to buy the station after a certain time, with the amount that had been paid for “hard costs” subtracted from the total price. The agreement also had an extension provision and other details.

Later, when asking the FCC to assign the license, Hoosier submitted a copy of the agreement, and the companies certified that their deal had complied with FCC rules. But the commission said there is no prior decision on which the terms having to do with payments in excess of “line charges” or operating costs would be allowed; and it said the deal violated its rules. (You can read details, including the dollar amounts involved, here.)

Also, the companies indicated that Hoosier had retained responsibility for maintenance of equipment and tower lease payments, produced public affairs programming and had two employees monitor IMI programming.“However, with respect to personnel, the parties indicated only that a ‘troubleshooting’ memorandum is posted at the station and directs IMI to contact Hoosier’s engineer if the station goes off the air. The TBA did not at that time require Hoosier to maintain any sort of staff presence at the station’s studio.” The FCC says even when a station is operated under a TBA, the licensee must staff its main studio with at least two employees, one of whom is a manager.

Thus the two companies will pay a penalty of $50,000 total to the federal government. IMI also will conduct compliance training for staff regarding programming agreements and the need to staff the main studio properly. And it agreed to engage legal counsel for compliance issues, among other things.